Friday, December 31, 2004

After the tsunami, what?

We are in the middle of the aid giving frenzy at the moment. As my colleague has pointed out, there seems to be a "beauty contest" as to which organization or country will give more. Not, you understand, which organization or country will achieve most through its aid, but which will give more money.

British people, we are told, have donated over £45 million already. (Another way of calculating that is to say that £1 million is being given every hour.) The British are known to be generous, but did any of those donors stop to ask what that money is for and what will happen to it? Somehow, I doubt it.

After all, did any of the ninnies who bought the reissue of Bob Geldof’s BandAid record stop to ask why the whole process needs to be gone through again, twenty years after the original kerfuffle? Did anyone recall that Geldof himself acknowledged on the tenth anniversary that none of the money he had raised had gone to the supposed recipients? Of course not. Thinking is not something you are supposed to do when it comes to giving aid. None of those who had contributed to the £45 million (with more to come, I expect) would like to be told that the likelihood is that the money will swell numbered accounts of officials in various off-shore tax havens.

As the American ships steam in and hand out aid that actually does some good; as the EU calls a donors’ conference two weeks too late, thus guaranteeing that its aid will do no good and a great deal of harm; as the various NGOs strut the stage, make political speeches but fail to distribute the vast amount of aid that has already been collected; other voices are being raised as well.

There is a certain sameness about natural disasters and their effects. They happen all the time, they cannot be stopped or prevented, they hit rich countries and poor. But the results are completely different. Rich countries are hurt, a few people die, some property gets destroyed. Then immediate aid is distributed and the rebuilding starts. Within a few months all is back to norm.

Poor countries are hit by disasters on the same or, even, smaller scale and they are devastated. Tens of thousands die, whole cities and regions are destroyed, the economic fall-out lasts for decades if not for ever.

After many years and many disasters, it has now become more or less acceptable to point this fact out, though it is still difficult to make people listen to the arguments about the evils of aid. One of the organizations that has been voicing such “heretical” thoughts consistently, throughout its history is he Mises Institute. One does not have to agree with their daily articles (for my taste, they are far too focused on economics without paying enough attention to political ideas) in order to note the good sense in many of them.

Today’s example is of interest. Entitled Government-Enhanced Disaster, it goes through the arguments about the effect natural disasters have and what should be done afterwards.

First the different effects on rich and poor countries, the same differences being noted both geographically and historically:

“In December, 2003, 30,000 people were killed in Bam, Iran, as an earthquake destroyed eighty percent of the buildings in the city. Thirteen years earlier, 40,000 people were killed by an earthquake in Gilan, Iran. In 1998, in Honduras and Nicaragua, Hurricane Mitch killed at least 10,000 people.

In Bangladesh, according to a 2001 UN report, chronic typhoons and flooding have killed over a half million people in the period from 1970 to 1998. Over the same period, 1.2 million died from drought-induced famine in Ethiopia.Many other poor nations have suffered similar catastrophes in recent years. According to the United Nations Development Programme, while only 11 percent of people exposed to natural hazards live in poor countries, they account for more than 53 percent of the total number of deaths. From 1980 to 2000, North Korea had the highest annual per capita death rate from disasters, followed by Mozambique, Armenia, Sudan, and Ethiopia. These are also among the very poorest nations in the world.

This correlation between poverty and natural disaster seems to hold up not only with a cross-section of nations, but also over time. As nations become wealthier, their losses of human life from natural calamities tend to fall. The 1906 San Francisco earthquake (and the subsequent fire) killed at least 3,000 people out of a population of about 400,000. The 1994 quake in the same area killed only 60, out of a population that had almost doubled. Over 8,000 people in the Galveston, Texas area died in the hurricane of 1900, but hurricane Andrew's 1992 path through a much more heavily populated Florida killed only 40 people.”

Several things are missing from this account. One is that an earthquake of greater strength as the one that hit Bam, hit California at the same time and few people outside the area bothered to notice it, because its effects were minimal.

Furthermore, it is worth adding that the worst hit countries are not just poor but live under extremely unpleasant and, even, totalitarian governments. It is not entirely accidental that North Korea should have the “highest annual per capita death rate from disasters”, while South Korea, just down the road, seems to come nowhere at all in the list.

The Ethiopian famine (remember BandAid?) was caused not so much by drought but by Colonel Mengistu’s Stalinist collectivization policies and the murderous war he was waging on the people of Eritrea. And so on, and so on.

The article goes on to discuss what should be done to prevent the catastrophic effect of these natural disasters. This is where the Mises Institute and, indeed, many of us, part company with received wisdom. As the author of the piece, Timothy D. Terrell says, it is counterintutive to suggest that what you need after an event of this magnitude is less rather than more government interference.

Government regulations will channel money into one particular aspect, for instance stronger foundations for buildings. That will ensure that there will be no money left for communication, meteorological work, medical aid, transport and all the many other aspects of disaster control that are absolutely essential.

Furthermore, as Mr Terrell does not add, the chances of those rules for stronger foundation being obeyed and the money intended for such construction being spent the right way in the countries in question are negligible. Those who can afford it, might build the right way, giving the necessary bribes; those who can afford only the bribes, will give those to be allowed to build any old how; and those who cannot even afford the bribes, will go on living in shanty towns until the next disaster.

People, Mr Terrell rightly points out, tend to understand what is good for them and do not need government officials to instruct them or impose regulations on them. Apart from the inherent inefficiency of the system, from the inevitable corruption that accompanies state control, it also requires ever higher levels of taxation (which may or may not be paid). Higher levels of taxation, as we know even in the developed West with the relatively transparent political system, destroy productivity and economic growth, the very factors that are needed for the creation of a system that will enable regions to deal with natural disasters.

It is noticeable that the one country that managed to evacuate people in time to prevent complete devastation by the tsunami was Kenya, one of the few places in Africa where the dead hand of the state is beginning to be losened and where globalization and foreign investment are not dirty words.

Western donors will, of course, participate in the charade. We shall continue to provide aid that will get misused or even stolen, that will keep the corrupt and oppressive politicians in place. And the great transnational oligarchy, full of its own importance will continue to shriek its abuse of globalization, of capitalism, of foreign investment. Until the next disaster, which will once again kill many thousands of those people whose lives would have been controlled by their own corrupt officials and the unaccountable tranzies, led by the European Union and its own corrupt and unaccountable aid-giving oligarchy.